This was a great subject. I work for an OE distributor. In my conversations with hundreds of shop owners, I've noticed that many of them lack a full understanding of what OE means, as well as the extent of the General Motors family, which includes Cadillac, GMC, Chevy, and Buick. This extends to other brands like Stellantis. Following these conversations, the first question often revolves around price, indicating that these may not be the right customers for our organization as they may not fully appreciate the benefits of OE parts for their business. These owners often provide various excuses for not using OE parts and instead opt to sell aftermarket parts, just like their competitors. This lack of differentiation makes it easy for customers to seek out the lowest prices elsewhere. Recently, I visited a young man who owns a European repair shop. Despite his labor rate being $120, he mentioned that they markup dealer parts by 15%. However, he also noted that customers still try to haggle for a better price. This is in contrast to an area where our Land Rover deal ship labor rate is $499 per hour.
Lots of good information, I'm looking into starting my first shop, I'm trying to make sure I have as much information as possible before going through go and starting.
That's awesome! This is a great place to start, as the majority of issues we see in shops is documented in this series. I'll warn you though - when starting out, you'll be extremely sensitive to people questioning your price or when things slow down. The first thing that you'll consider doing? Lowering your price or changing your policies to make it easier to do business with you. Now there's nothing wrong with reviewing your prices to ensure they are where they need to be. And there's nothing wrong with reviewing policies to ensure nothing is out of line. But do this using fact, not emotion. We see shops accept client supplied parts, lower their prices, or bring in jobs out of their wheelhouse - I'm guilty of it myself. The problem? It ALWAYS bites you. So my advice would be to operate your business from a position of data and fact - this will stop emotional decision making in its tracks.
Reach out to Cecil at The Institute for Automotive Business Excellence. Not sure if he works with body shops. If not, we're happy to make another connection for you!
Good conversation. Why do many shop owners fear raising labor rates and part margins? Because they fear pricing themselves out of the job. It's a fine line between being the best shop in town and charging for it and being the best shop in town and overcharging for it.
David, ive been going through all the podcast episodes and your rant about parts is something that i couldnt agree more with! Ive been saying that for YEARS and am trying to educate my current employer, manager and advisors about part's. We as an industry need to STOP using DIY "quality" parts and start using original equipment supplier brands. Consumers are spending their hard earned money to have us repair their vehicles and the parts the majority of the industry installs, are going to need replaced 2 or 3x more than the OE. If i remove a part from a vehicle, i want to install a part that i KNOW will last as long or longer. But, what do i, im just a dumb mech-ah-nic.
As a good tech at a terrible dealer, my goal at age 43 was to try to go out on my own. Your videos seem to make it look like just wealthy people can ever afford to start a shop. Maybe you can throw a video in to give a guy hope that it is doable without 300k in the bank..... or maybe it's not. This series is awsum... learning i should stay at my terrible job is not
I feel that! We're not saying you should stay at your job, or that it's not possible! We REALLY REALLY want to ensure folks have REALISTIC expectations. We have a ton of followers who started with unrealistic expectations - we field comments daily of folks asking for help and feedback about a bad situation due to not being realistic about what to expect. I get it can be disheartening, and I really am sorry. But knowing first? Should atleast give you some insight into what your going to see. We'd much rather you either go get a business loan and build it correctly, buy an existing business that's a quality shop or...in David's shoes, not open one at all. I'm not against opening a shop - so long as it isn't taking away from your family and you have a plan for success aside from "I want to work for myself, so I'm just going to do it!" This business takes some acumen, training, and financial knowledge to manage - its NOT going to be successful if the only part of the knowledge you have is how to fix cars.
@@ChangingTheIndustry this is true. I went into my local dodge for oem filters for a customer with a new truck who wasnt keen on using aftermarket for piece of mind, dealer was like we only carry these partsmaster brand ones not the mopar.... alrighty then
Problem today is it’s getting harder and harder to find quality parts, especially one you need relatively fast. I have seen “GM” or “AC DELCO” parts that had the labels on the part and a proper looking box that were obviously fake. My neighbor has owned a very successful car repair shop for almost 30 years and despite all the efforts he puts into sourcing name brand quality parts when they can be found he tells me over the last 10 years or so his parts failure warranty work has steadily increased to 40%
Industry wide the total warranty percentage is around 3% from what I've seen. Is it going up? Absolutely! It's very frustrating. But it's not at 40% yet 🤣
@@ChangingTheIndustry bruh, I can pull my invoices and run a simple excel spreadsheet calculation to determine percentage of overall sales discounted. We also have a job designation for "Internal Warranty". What are you on about?
Now try that in the rust belt where a vehicle lasts 10 years if your lucky. You have to know your customer and how long that vehicle is going to stay on the road before it folds in half.
Chiming in.... Sometimes parts are difficult to find.. older car 🚗. Some maybe most shops don't have time to search with determination to find oem parts and availability ... again older car with great repair maintenance history. There are those who need and want help to fix their cars. Im okay with diagnostic fees labor costs.. just want honest reliable reasonable respectful service. Don't have tools or shop but knowledgeable about my car. 😊 ps dont want or need up sell . Just passionate with a plan and spend my time and money reasonably honestly fairly 😮
It's not about "upsell" the consumer HAS to understand that. It's our job to inform the consumer of the condition of the automobile - we're professionals and have a responsibility as such. So when we tell you about the things the car needs, it's not to "try and sell you something" - it's a combination of informing you about what to expect and covering out butt's or reducing liability. If you don't want to do the suggested repairs, that completely fine by us - but now that's your decision NOT ours.
@ChangingTheIndustry I think you might be miss understanding my comment 😕 My agreement was on parts labor diagnostic fees..just difficulty of getting parts. Not necessarily trying to avoid additional charges for parts. Just trying to get them lol . I will also reread my comment. My goal was to give customers view and will add not trying to pay less. I am in support of a mechanics knowledge education and experience . Upsell part was added because of previous experience yes I realize that is not always the case
This was a great subject. I work for an OE distributor. In my conversations with hundreds of shop owners, I've noticed that many of them lack a full understanding of what OE means, as well as the extent of the General Motors family, which includes Cadillac, GMC, Chevy, and Buick. This extends to other brands like Stellantis. Following these conversations, the first question often revolves around price, indicating that these may not be the right customers for our organization as they may not fully appreciate the benefits of OE parts for their business. These owners often provide various excuses for not using OE parts and instead opt to sell aftermarket parts, just like their competitors. This lack of differentiation makes it easy for customers to seek out the lowest prices elsewhere. Recently, I visited a young man who owns a European repair shop. Despite his labor rate being $120, he mentioned that they markup dealer parts by 15%. However, he also noted that customers still try to haggle for a better price. This is in contrast to an area where our Land Rover deal ship labor rate is $499 per hour.
Thanks for the entertaining and informative show!👍
Lots of good information, I'm looking into starting my first shop, I'm trying to make sure I have as much information as possible before going through go and starting.
That's awesome! This is a great place to start, as the majority of issues we see in shops is documented in this series.
I'll warn you though - when starting out, you'll be extremely sensitive to people questioning your price or when things slow down.
The first thing that you'll consider doing? Lowering your price or changing your policies to make it easier to do business with you.
Now there's nothing wrong with reviewing your prices to ensure they are where they need to be.
And there's nothing wrong with reviewing policies to ensure nothing is out of line.
But do this using fact, not emotion.
We see shops accept client supplied parts, lower their prices, or bring in jobs out of their wheelhouse - I'm guilty of it myself.
The problem? It ALWAYS bites you.
So my advice would be to operate your business from a position of data and fact - this will stop emotional decision making in its tracks.
Thank you so much for the content and the information. I look forward to gaining more insight and a better understanding about the industry
I need a overhaul on running a body shop you mentioned being a coach I want in
Reach out to Cecil at The Institute for Automotive Business Excellence. Not sure if he works with body shops. If not, we're happy to make another connection for you!
Good conversation. Why do many shop owners fear raising labor rates and part margins? Because they fear pricing themselves out of the job. It's a fine line between being the best shop in town and charging for it and being the best shop in town and overcharging for it.
What is "overcharging"?
David, ive been going through all the podcast episodes and your rant about parts is something that i couldnt agree more with! Ive been saying that for YEARS and am trying to educate my current employer, manager and advisors about part's. We as an industry need to STOP using DIY "quality" parts and start using original equipment supplier brands. Consumers are spending their hard earned money to have us repair their vehicles and the parts the majority of the industry installs, are going to need replaced 2 or 3x more than the OE. If i remove a part from a vehicle, i want to install a part that i KNOW will last as long or longer. But, what do i, im just a dumb mech-ah-nic.
How can a company like FCP euro sell a part retail for less than my price at any of my vendors?
You can get a wholesale account with FCP 😉
As a good tech at a terrible dealer, my goal at age 43 was to try to go out on my own. Your videos seem to make it look like just wealthy people can ever afford to start a shop. Maybe you can throw a video in to give a guy hope that it is doable without 300k in the bank..... or maybe it's not. This series is awsum... learning i should stay at my terrible job is not
I feel that!
We're not saying you should stay at your job, or that it's not possible!
We REALLY REALLY want to ensure folks have REALISTIC expectations.
We have a ton of followers who started with unrealistic expectations - we field comments daily of folks asking for help and feedback about a bad situation due to not being realistic about what to expect.
I get it can be disheartening, and I really am sorry.
But knowing first? Should atleast give you some insight into what your going to see.
We'd much rather you either go get a business loan and build it correctly, buy an existing business that's a quality shop or...in David's shoes, not open one at all.
I'm not against opening a shop - so long as it isn't taking away from your family and you have a plan for success aside from "I want to work for myself, so I'm just going to do it!"
This business takes some acumen, training, and financial knowledge to manage - its NOT going to be successful if the only part of the knowledge you have is how to fix cars.
The dealers aren't marking up parts like that anymore. The dealers in my area are starting to do repairs cheaper than we can do it.
Actually, I think they are still doing it BUT they've started using parts store parts 😉
Cheapest they can get around here.
@@ChangingTheIndustry this is true. I went into my local dodge for oem filters for a customer with a new truck who wasnt keen on using aftermarket for piece of mind, dealer was like we only carry these partsmaster brand ones not the mopar.... alrighty then
Problem today is it’s getting harder and harder to find quality parts, especially one you need relatively fast. I have seen “GM” or “AC DELCO” parts that had the labels on the part and a proper looking box that were obviously fake. My neighbor has owned a very successful car repair shop for almost 30 years and despite all the efforts he puts into sourcing name brand quality parts when they can be found he tells me over the last 10 years or so his parts failure warranty work has steadily increased to 40%
Industry wide the total warranty percentage is around 3% from what I've seen.
Is it going up? Absolutely!
It's very frustrating. But it's not at 40% yet 🤣
That sounds like a tech or process issue. I'm well under that 3% mentioned above.
But that's because you aren't billing them at full cost....
@@ChangingTheIndustry bruh, I can pull my invoices and run a simple excel spreadsheet calculation to determine percentage of overall sales discounted.
We also have a job designation for "Internal Warranty".
What are you on about?
Now try that in the rust belt where a vehicle lasts 10 years if your lucky. You have to know your customer and how long that vehicle is going to stay on the road before it folds in half.
I'm lost...how does that comment apply here?
The premise you are selling about oem parts does not necessarily apply today.
👍
Chiming in....
Sometimes parts are difficult to find.. older car 🚗. Some maybe most shops don't have time to search with determination to find oem parts and availability ... again older car with great repair maintenance history. There are those who need and want help to fix their cars. Im okay with diagnostic fees labor costs.. just want honest reliable reasonable respectful service. Don't have tools or shop but knowledgeable about my car. 😊 ps dont want or need up sell .
Just passionate with a plan and spend my time and money reasonably honestly fairly 😮
It's not about "upsell" the consumer HAS to understand that.
It's our job to inform the consumer of the condition of the automobile - we're professionals and have a responsibility as such.
So when we tell you about the things the car needs, it's not to "try and sell you something" - it's a combination of informing you about what to expect and covering out butt's or reducing liability.
If you don't want to do the suggested repairs, that completely fine by us - but now that's your decision NOT ours.
@ChangingTheIndustry I think you might be miss understanding my comment 😕
My agreement was on parts labor diagnostic fees..just difficulty of getting parts. Not necessarily trying to avoid additional charges for parts. Just trying to get them lol . I will also reread my comment. My goal was to give customers view and will add not trying to pay less. I am in support of a mechanics knowledge education and experience . Upsell part was added because of previous experience yes I realize that is not always the case